Electronic bill payment systems allow a consumer, party or bill paying entity (payer(s)) to direct their bank, an agent of their bank, or a non-bank bill payment service or bureau to pay amounts owed to merchants, service providers and other billers (payee(s)) who bill or invoice consumers for amounts owed. A bill payer is any person or entity paying a bill, invoice, loan, or making a payment. A bill issuing party is any person or entity sending or issuing bills, loans, invoices or requests for payments.
Unfortunately, some bill issuers impose penalties on the bill payer in the event of late, partial or missed payments. Some examples of these types of penalties are late fees, interest rate increases, credit score reductions, accelerated payments, increased payments, line of credit reductions and reduced ability to borrow. Many bill issuers such as credit card companies take any opportunity to raise interest rates and collect late fees.
In some cases, the penalty is out of proportion to the amount and timing of the payment. For example, if a payment is one day late, the interest rate on a credit card may be increased by 100 percent or the entire credit card balance may become immediately due. In some situations, the penalty may cause undue hardship for the bill paying party.